Blackwater May Have Fudged Numbers to Get $100M in Contracts

July 29, 2008— -- The controversial security contractor Blackwater Worldwide is in the spotlight again after federal investigators found that the company may have misrepresented its number of employees in order to obtain more than $100 million in contracts.

A memorandum by the Small Business Administration's Office of Inspector General raises questions about the agency's determination that Blackwater security personnel were independent contractors instead of Blackwater employees, as well as Blackwater's claim to be a small business.

"Blackwater or its affiliates obtained…a total of 39 contracts that were set aside for small businesses even though the bidder may not have met SBA's criteria to be considered a small business," the report said.

Congressman Henry Waxman (D-California), chairman of the House Oversight and Government Reform Committee, requested an investigation in March into the possibility that Blackwater "improperly exploited this "independent contractor" designation." According to Waxman's request, "Blackwater obtained small business contracts without competing with other qualified bidders that properly designated their guards as employees."

Blackwater is one of the country's largest private military contractors and has received almost $1.25 billion in federal contracts since 2000, according to Waxman's letter to the Committee on Oversight and Government Reform. Blackwater's web site says it was founded in 1997 and provides security for U.S. officials in Iraq "so that troops can focus on the military task at hand."

The IG report is critical of both Blackwater and the SBA saying that when Blackwater claimed that the 1,000 security personnel it provided under the State Departmen's $1.2 billion Worldwide Personal Protective Service contract were independent contractors, the Small Business Administration "did not adequately explain its reason for concluding that the security personnel on the DOS contract were independent contractors." The report also said the SBA "failed to consider Blackwater's own contract with its security personnel, which states that Blackwater is an "employer" for purposes of the Defense Base Act."